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Outsourcing IT?

It’s amazing how many IT managers, let alone CFO’s CEO’s boards of directors believe that IT can be outsourced to save costs. From my experience this stems from a number of causes.

1) Management does not know what value IT provides as integral part of the business.

2) Management does not know what IT does.

3) Management does not know how much work IT does, or how.

4) Consultants, trying to sell something, have managed to convince management that outsourcing saves money. Either as a matter of personnel costs, or general operating costs.

This almost always results in reduced productivity in the IT department, staff churn and the loss of the best staff, a loss of, or a general lack of new documentation as to IT processes, software, development and maintenance.

And while addressing the issues, even the mere mention of outsourcing will result in degraded IT performance. And no amount of talk from management will result in a placation of the fear. Restoration of trust will be slow and painful, and in some cases will result in management looking further into outsourcing.

The problem lies in understanding, information and truth. IT will have to become involved in promoting their value to the business. Educating management as to the need for IT costs, and how they can promote to the bottom line of the business.

From the management perspective outsourcing looks good, document what IT does, and negotiate a cheaper deal to provide all the necessary services. The problem is as above, management does not know what IT does, or at least not everything, and as a matter of course they will omit the intrinsic value that loyal and innovative IT staff can, and do (unless demotivated by outsourcing rumors).

Consultants invariably manage to convince people that all IT processes and functions can be documented and mapped. This reason in fact, is the ‘why’ in why outsourcing does not reduce costs. Besides the costs that the consultant will charge for ‘complete documentation’ which isn’t complete. The outsourcing firm will contract for ‘complete documentation’ which does not provide complete services, or unsatisfactory ones, and then charge for additional ‘services’ not in the original contract, but should have been included in the consultants ‘complete documentation package’ and weren’t.

IT, and a dedicated staff provide more that simple ‘processes’ that can be documented or identified. The intrinsic value of good staff is never documented. This isn’t unusual as in most businesses HR has been substituted for people management skills. Staff are more or less just cogs, just wheels in a machine. The last thing a consultant will do is document staff qualities. You just can’t qualify, or replace good staff.

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1 thought on “Outsourcing IT?”

I’ve come to this post while scanning over the more technical ones, like oracle versus … And I’ve stopped and read. Why? Because it is good to read your views on something I can relate to. Outsourcing and the influence it has on staff motivation… The whisper of impending redundancy… the prospect of uprooting…
It strikes me that you might be v well placed to write an awful lot about how IT staff have coped with the permanent revolution in software, systems, fashions in company structure, cultural upheaval etc etc.
After 25 years in the business you have forgotten so much (says he teasingly) that there must be so many stories lingering under the surface of memory.
I find IT people live in a world of their own and occasionally come out into the plain speak of everyday dialogue. This is an outsider’s perspective and does not reflect the deep vein of emotion experienced by IT workers.
Maybe i should simply read on, or go back through your blog to find the writing I’m grappling to grasp.